Local aid brings local government into race for governor

What a city spends on its police force or its parks doesn't usually get any attention in the Minnesota governor's race, but because the state's budget problems loom so centrally this year, local spending issues have been pulled in as well.

Since the 1970s, hundreds of cities and towns have relied on local government aid (LGA) from the state to keep property taxes low while they pay for basic services. The figure is about a half-billion dollars a year, and it has been the target of state budget cuts in each of the past three years.

Last year, for example, cities received $155 million less than they had been expecting. Meanwhile, total property taxes around the state rose by 100 percent from 1999 to 2007.

Candidates Tom Emmer, Tom Horner and Mark Dayton have disputed how that state money has been used, how it should be used and what role it plays in the level of local property taxes.

Republican Tom Emmer disputes that property taxes always increased in cities that lost LGA. He questions why 20 cities, which include Minneapolis, St Paul, as well as Winona and Duluth, receive half the aid dollars.

Emmer says that disparity will change if he's elected, but the campaign didn't provide details in dollars. Emmer told a debate at the University of St. Thomas, that he thinks LGA should fund basic city services, suggesting that sometimes it has been used for things that aren't as necessary.

"It was created to give communities without the economic base to provide the essential services that government has to provide, namely police and fire service, perhaps some water and sewer infrastructure," Emmer said. "Those are the things it was intended for."

Independence Party candidate Tom Horner echoes some of the same criteria. Horner says how cities earn LGA money from the state should focus on what cities need to spend on police, fire, water and sewer.

He also wants to consider other factors like the poverty rate and how much cities are able to pay in property taxes. Horner told the debate audience at the University of St. Thomas that local government aid makes up for the difference in property tax wealth between rural and suburban cities.

"We do have to have LGA that is fair, reasonable and helps those communities that do need assistance to compete," he said.

Like Tom Emmer, Horner has not put a dollar figure on how much he will fund LGA.

He has proposed that cities keep more of their money by eliminating the state sales tax they have to for things like computers and some vehicles. Emmer also advocates local governments keep more tax dollars that currently go to the state, including business and income taxes.

DFLer Mark Dayton says he will keep LGA funding at the current level set by the legislature, or about $900 million over the next two years. At a debate in Mankato, Dayton cited a Department of Revenue figure that for every dollar cut in local government aid, property taxes rose by 67 cents.

"The fiscal integrity of the relationship between the state of Minnesota and local governments is absolutely essential to enable people to live in Greater Minnesota and to be able to afford to and not have property taxes soar uncontrollably," Dayton said.

Around 700 communities in Minnesota hope to receive their second LGA payments for the year in December. Cities have already made cuts, such as layoffs or reducing services, after receiving less in local government aid this year. No matter who is elected as governor, cities say they plan to rely less on LGA in the future.